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Change Change %
6.60 4.89%

Updated:29 May, 2020, 15:59 PM IST

Change Change %
5.35 3.96%

Updated:29 May, 2020, 16:01 PM IST


I have pleasure in writing to you after successfully completing an eventful and challenging 2009–10. For Cholamandalam, the sectoral slowdown and financial meltdown transpired concurrently. The company confronted these unprecedented challenges through a directness and swiftness of purpose. The Board, management and the entire team worked relentlessly with a singular objective of returning the company to its pristine profitability in the shortest possible time.

The Vehicle Finance business disbursements grew 90% to Rs.2861 crores. The growth in new commercial vehicles disbursements (in units) was 138% over the previous year against the industry's growth of 38%. Net credit losses and repossessed stock levels declined in absolute value over 2009–10, while our asset book increased 27%. Fee income increased 115% and insurance cross–sell revenue increased 20%.

The Home Equity business disbursements grew 100% to Rs.1004 crores and asset book grew 96% to Rs. 1455 crores as on 31 March, 2010. Net credit loss was a mere 0.4% of the portfolio, considerably lower than the industry average.

The Corporate & Mortgage Finance business reported an asset float of Rs. 511 crores and nil loan losses or defaults in spite of higher stock market volatility.

Notwithstanding the challenging environment in the Consumer Loans industry, the company did well to restrict its downside through a combination of asset sell–down and aggressive collection. As a result, personal loan receivables outstanding in the Balance Sheet declined from Rs.1371 crores at the beginning of 2009–10 to Rs.234 crores (net of provisions) as on 31 March, 2010.

The PBT for the secured asset finance businesses grew 72% to Rs. 124 crores over the previous year (2008–09 PBT Rs. 72 crores). The fee income increased 104% over the previous year and revenues from insurance cross–sell increased 20% during the same period. The interim dividend of Re 1 per share (face value Rs 10 each) that was paid for 2009–10 must be seen as a modest acknowledgement of this improved performance and confidence to do even better.

Some of the decisive actions taken to move the company ahead without staying in recession mode included an infusion of Rs 300 crores in the form of fully convertible preference shares by our promoters, mobilising Rs.2500 crores by way of long term loans from banks to strengthen the ALM position, rationalizing the cost structure by closing 75 exclusive personal loan branches and consolidating the overall branch structure by 120 offices The company also made increased provisions in the Personal Loans business to the extent of Rs.117 crores in 2009–10 as per the company's provisioning norms which are more stringent than the prevailing RBI regulations.

The company adopted sound asset–liability management, robust institutionalized risk management and a lean cost structure adapted for all market cycles.

Going forward, the company will progressively move towards becoming an asset finance company with around 60% of its revenues and assets derived from the asset financing business. Other than vehicle finance, the company will focus on growing its Home Equity business through the mortgage of self–occupied residential properties.

A number of initiatives to rationalize the operations of the wealth management subsidiaries led to a turnaround in the operations of the said business. The subsidiaries, Cholamandalam Securities Limited and Cholamandalam Distribution Services Limited posted a profit before tax of Rs.3.48 crores and Rs.6.89 crores respectively as against losses of Rs.9.01 crores and Rs.18.25 crores respectively in 2008–09.

A key recent development was the termination of the joint venture between our promoters, the Murugappa Group, and DBS Bank Ltd., Singapore, with effect from 8 April 2010. In view of the change in our approach and business model, the partners, after a detailed discussion, decided to focus on their respective priorities and strategies. As a result, the company and its subsidiaries reverted to their names prior to the joint venture.

Your promoters, the Murugappa Group, more than reinforced their commitment to this business by investing more than Rs.525 crores in the last one year. The company readied to grow cautiously and become a full–fledged asset finance company. I take this opportunity to thank all shareholders who stood by the company during the difficult times and thank you for your continuous support and encouragement.

Thanking you,

Best wishes,



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